Blog: Talbots’ own credit crunch
Leonie Barrie | 17 April 2008
Things are not looking good for Talbots. The US clothing retailer, which recently posted a fourth quarter loss of $171m is in the midst of a reorganisation that involves closing 78 stores, has now had a vote of no confidence from its bankers.
Bank of America has cancelled its $130m credit line, and the existing $135m letter of credit facility with HSBC won’t be renewed after 8 August.
As well as making it hard for the company to find a new form of financing – and certainly not one that’s cheap – the loss of these credit lines has serious implications for its suppliers.
Without the letters of credit, in which lenders guarantee payment for merchandise, it’s unlikely suppliers – most of which are in Asia – won't ship goods to Talbots without up-front cash payments.
Those that continue to do business with the retailer will be working under revised vendor agreements that give it 45 days to pay – not only increasing the risk for suppliers but also meaning that their own cash flow is impaired.
Talbots believes its working capital lines of $165m are “sufficient” to run the company in 2008. But if it plans to purchase inventory depending on the availability of cash in hand, there’s a strong likelihood it may be forced to cut its inventories.
Not surprisingly, the market isn’t impressed. According to Bloomberg calculations, stock in the clothing chain yesterday saw its biggest drop in more than 14 years.
Fashion retailer H&M and UK based glove and leather manufacturer Pittards both say they are monitoring the situation in Ethiopia closely after the country's government declared a state of emergency af...
Increasing competition for garment sourcing contracts is seeing China not only being challenged by other countries in Asia, but by sub-Saharan African and even Russian suppliers too. And it is pushing...
The monthly minimum wage for workers in Cambodia's textile, garment and footwear sector is set to rise to $153 from January next year, following a vote on the issue last week. The increase marks a ris...
The results of two highly-anticipated initiatives in the sportswear sphere were revealed last week: the launch of Under Armour’s new UAS lifestyle brand and the first pair of running shoes created at ...
- Fashion fit for the future – strategies for speed
- Digitisation to drive new apparel-making models
- Will new Vietnam wage hinder competitiveness?
- Under Armour Lighthouse will disrupt production
- How TAL Apparel is staying ahead of the game
- Gap to shutter all UK Banana Republic stores
- Child refugees found in Turkey apparel factories
- M&S "unappealing" clothing a barrier to growth
- Reebok Liquid Factory reinvents shoe production
- Chinese manufacturer invests $20m in US facility
- Africa-Med strategic sourcing review – comparing East Africa, North Africa and Turkey
- REPORT BUNDLE: Africa-Med, Southeast Asia and Central America strategic sourcing pack
- Southeast Asia strategic sourcing review – a focus on Cambodia, Vietnam and Myanmar
- Apparel (GLOBAL) - Industry Report
- Global Sports and Fitness Wear Market 2016-2020